Electronic Funds Transfer (EFT) Toolkit

Effective January 1, 2014, health plans are required to offer electronic funds transfer (EFT) payments using the Automated Clearing House (ACH) to physician practices that request this method of claims payment. ACH EFT, similar to direct deposit of paychecks utilized by many employers, is a funds transfer tool in which payer-to-provider payment is processed through the ACH Network, a payment system implemented by NACHA - The Electronic Payments Association.

"Stop Paying to Get Paid": Attend this free CME webinar designed to provide information on effective electronic payments and educate physicians on their rights under the ACH EFT regulations.

Top 5 Reasons to Transition to ACH EFT

When compared to paper checks and virtual credit cards (a widely used form of electronic payer-to-provider payment), ACH EFT offers the following advantages to physician practices:

Avoiding a shift in payment processing costsVirtual credit cards place the payment processing costs squarely on the physician through interchange fees. ACH EFT eliminates this improper pay structure by keeping more of the contractual payment with the physician.

Maximizing payment amountsACH EFT saves practices money, whether by eliminating the manual processing and deposit of paper checks or avoiding costly virtual credit card fees, which can be as high as 5% of the total payment. Standard ACH EFT only costs about $0.34 per transaction.

Saving time and money spent on manual processesUnlike paper checks and virtual cards, which require administrative processing by a provider’s office, payments made through ACH EFT are automatically posted to the provider’s bank account.

Reducing riskACH EFT payments are processed directly from a health plan’s bank to a physician’s bank over the secure ACH Network. As a result, payments do not face the risks of lost or stolen paper checks or fraudulent use of virtual credit cards.

Optimizing processing of electronic remittance advice (ERA)The healthcare ACH EFT system was designed to enable simplified payment reconciliation when used in conjunction with the standard ERA transaction. Virtual credit card payment information cannot be sent in a compliant ERA transaction and therefore requires time-consuming manual processing.

For additional information on ACH EFT, please see the EFT resources below.

Read the August 25, 2014 joint letter of the AMA, American Hospital Association, Medical Group Management Association, and NACHA on concerns with health plan virtual card payments and non-compliant ACH-EFT usage.

In a February 20, 2015 letter, the AMA and 13 other signatory provider groups urged CMS to issue additional guidance on the use of virtual credit cards that would require insurers to give full upfront disclosure of associated fees and to obtain physician consent prior to implementation of virtual card payments. The providers also requested that CMS prohibit the assessment of percentage-based fees for the standard electronic funds transfer (EFT) transaction through the Automated Clearing House (ACH) network.

EFT and electronic remittance advice (ERA) work hand in hand to streamline remittance and payment processes. Access the AMA's ERA toolkit to learn more about using the ERA transaction.

Other EFT resources

NACHA guide to understanding EFT payment processing: Take the mystery out of electronic health care payments with the document "ACH Primer for Healthcare: A Guide to Understanding EFT Payment Processing" developed by NACHA – The Electronic Payments Association. Written exclusively for physicians and other health care professionals, this valuable primer will help you understand the basics of EFT, identify steps for moving from paper-based payments to EFTs in compliance with government mandates, and answer your most pressing questions. Experts guide you step-by-step through the Automated Clearinghouse (ACH) Network, explaining transaction flow and applications, and identifying available treasury services which can assist you in leveraging EFT. Transition your staff and operations seamlessly using this free, information-rich resource.

CMS education on ERA/EFT: Learn how operating rules for EFT/ERA can speed up payment in your practice! View education from CMS about ERA/EFT for guidance and tips on ERA/EFT enrollment and usage.

EFT registration links

Use the following links to navigate to ACH EFT registration and other information on some of the large national health plans’ websites: